TaxTMI 
TaxTMI 
2025 (3) TMI 1268
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....record. It comes up on hearing both the sides that primarily the issue determined by the ld. CIT(A) and now asserted before us is as to what is the consequence of conclusion of insolvency proceedings initiated by appellant which was formerly known as M/s Educomp Infrastructure & Schools Management Ltd., on the impugned assessment orders for respective AY involved in these appeals. Pertinent to mention is that appeals before the ld. CIT(A) were filed in the name of M/s Jasrati Education Solutions Limited and so are filed now. 3. The facts necessary for disposal of these appeals are that in regard to AY 2013-14, assessment u/s 143(3) was completed on 20.05.2015 and in AY 2016- 17, return of the assessee was processed u/s 143(1) of the Act on 25.08.2017 and the return for AY 2018-19 was filed on 31.10.2018 and notice u/s 143(2) was issued on 22.09.2019. In regard to AY 2013-14 and AY 2016-17 notice u/s 148 was issued on 20.03.2020 and 19.03.2020 respectively. The CIRP proceedings had also taken in case of the assessee on 25.04.2018 and a moratorium u/s 14 of Insolvency and Bankruptcy Code (IBC) was passed. On 24.05.2018, Insolvency Resolution Professional constituted the Committee ....
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.... 31.03.2023 for A.Y. 2008-09 where the bench had held that since the appeal filed by the Revenue after the moratorium period is not maintainable and hence dismissed. Ld. CIT(A) has relied the same and dismissed the appeals of assessee. As for convenient reference we reproduce the para 5.3 to para 6 from the impugned order of ld. CIT(A) for AY 2013-14, which is common to other AY, except the paragraph number being different:- "5. Determination and Decision : 5.1 All the Grounds of Appeal are related to disallowance of Rs. 39,80,47,655/- u/s. 56(2)(viib) rwr 11U & 11UA(2) of the Act, on account of excess consideration received towards share premium and further Rs. 1,40,00,000/- on account of unexplained payment made to M/s. Bhagawati Trading Co (Prop. Sanjiv Yadav). I have gone through the facts of the case and submissions filed by the Appellant and my decision is as under. 5.2 In the case of the Appellant, Return of Income for A.Y. 2013-14 was filed on 30.11.2013 declaring total income at (-) Rs. 10,50,68,978/-. Scrutiny assessment u/s. 143(3) was also completed vide order dated 20.05.2015 computing loss at (-) Rs. 8,61,21,015/-. However, based on the subs....
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.... AO for AY 13-14 along with the relevant judicial precedents which clearly state that once a resolution plan is duly approved by the Adjudicating Authority under Section 31(1), the claims as provided in the resolution plan shall be frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of the resolution plan by the Adjudicating Authority, all such claims, which are not a part of the resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect of a claim, which is not part of the resolution plan. A.5 The Resolution Plan approved by NCLT also states that all dues arising in relation to the provisions of Income tax shall be permanently settled by attributing a NIL value to them and the Appellant shall not be liable to pay any other amount against such demand. A.6 Upon approval of this Resolution Plan by the NCLT, any and all rights and entitlements of, claims or demands made by or liabilities or obligations owed or payable to, any gove....
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....ivil Appeal No.8129 of 2019 order dated 13.04.2021, wherein the Apex Court has held that once resolution plan is approved by adjudicating authority u/s.31 of I & B Code, the claim has been provided in the resolution plan shall stands frozen and will be binding on the corporate debtors and its employees, members, creditors, including Central Government. In this case, the Hon'ble NCLT ordered liquidation of respondent company under I & B Code and further, the claim of the Department has been rejected. Therefore, we are of the considered view that appeal filed by the Revenue after the moratorium period is not maintainable and thus, the appeal filed by the Revenue is dismissed as not maintainable. 6. In the result, appeal filed by the Revenue is dismissed. CO No.92/Chny/2019: 7. Since the appeal filed by the Revenue has been dismissed as not maintainable, the Cross-Objection filed by the assessee against the order of the Ld.CIT(A), is also not maintainable and thus, Cross-Objection filed by the assessee is dismissed as not maintainable. 8. In the result, appeal filed by the Revenue in ITA No.1892/Chny/2019 & Cross-Objection filed by the assessee in C....
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....rities in terms of section 238 of Code, 2016. 3 That the CIT(A) has erred on facts as well as in law in dismissing the appeal in not appreciating that the appeal was to be allowed and not dismissed as non-maintainable, due to approval of Resolution Plan, since the Assessment Order was to be quashed/reversed in order to give effect to Resolution Plan through a proper remedy available in law which included the allowance of appeal by CIT(A) under section 250 of the Act. 4 That the CIT(A) has erred on facts as well as in law in dismissing the appeal as non-maintainable without providing the opportunity of being heard to the Appellant ." 6. Now what we find relevant is that assessee underwent a Corporate Insolvency Resolution Process (CIRP), pursuant to the order under section 10 of Insolvency and Bankruptcy Code (IBC) on April 25, 2018 passed by the NCLT. As per the provisions of IBC, Committee of Creditors sanctioned the Resolution Plan proposed by Mr. Parmjit Gandhi, under section 30(4) of the Code, 2016. Subsequently, the aforesaid Resolution Plan was approved by the Committee of Creditors under section 30(4) of the IBC, which was further approved by the Adjudic....
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....Relief sought under Resolution Plan The Applicant proposes to pray before the Hon'ble NCLT to grant the following relief under the Resolution Plan: 11.1 In relation to direct and indirect taxes including but not limited to The Income Tax Act 1961, Goods and Services Tax, Excise Duty etc. a) Income tax benefits as permitted under section 79 and any other applicable provisions of the Income Tax Act, 1961 for set off of unabsorbed depreciation, carry forward and brought forward losses. b) MAT under section 115JB of the Income Tax Act. 11.2 All assessments / appellate or other proceedings pending in case of the Corporate Debtor, on the date of the order of NCLT relating to the period prior to that date, shall stand terminated and all consequential liabilities, if any, stand abated and should be considered to be not payable by the Corporate Debtor. 11.3 All notices proposing to initiate any proceedings against the Corporate Debtor in relation to the period prior to the date of NCLT order and pending on that date, shall stand abated and should not be proceeded against. Post the order of the NCLT, no re-assessment/ revision or....
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.....5 of the Resolution Plan 5 Financial Creditors (Upfront) 904.94 499.88 To be paid as per clause 3.2.3 of the Resolution Plan Total 501.00 8. Then we find that when final order u/s 30(4) of IBC was passed NCLT had ordered in para 45 and 46 as follows; "45. In view of the above discussion, the resolution plan as approved by the CoC under Section 30 (4) of the Code is hereby approved. The resolution plan so approved shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved in the Resolution Plan. 46. Under the provisions of Section 31 (3) of the Code, we also direct as under:- a) The moratorium order passed by the Adjudicating Authority under Section 14 of the Code on 25.04.2018 shall cease to have effect; and b) The RP shall forward all records relating to the conduct of the CIRP and t....
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....ny period prior to the Closing Date, shall stand extinguished and the Corporate Debtor or Resolution Applicant shall not be liable to pay any amount against such demand. 4.4.2. All assessments/ appellate or other proceedings pending in case of the Corporate Debtor, on the Effective Date, relating to the period prior to that date, shall stand terminated and all consequential liabilities, if any, stand abated and should be considered to be not payable by the Corporate Debtor in relation to the period prior to the Effective Date and pending on that date shall stand abated and should not be proceeded against. Post the Effective Date, no re-assessment / revision or any other proceedings under the provisions of the Income Tax Act shall be initiated on the Corporate Debtor in relation to period prior to acquisition of control by the Resolution Applicant and any consequential demand should be considered non- existing and as not payable by the Corporate Debtor. Any proceedings which were kept in abeyance in view of the insolvency process or otherwise shall not be revived post the order of NCLT. 4.4.3. Any and all rights and entitlements of the Governmental Authorities incl....
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.... Code is, providing for revival of the Corporate Debtor and to make it a going concern. I&B Code is a complete Code in itself. Upon admission of petition under Section 1, there are various important duties and functions entrusted to RP and CoC. RP is required to issue a publication inviting claims from all the stakeholders. He is required to collate the said information and submit necessary details in the information memorandum. The resolution applicants submit their plans on the basis of the details provided in the information memorandum. The resolution plans undergo deep scrutiny by RP as well as CoC. In the negotiations that may be held between CoC and the resolution applicant, various modifications may be made so as to ensure, that while paying part of the dues of financial creditors as well as operational creditors and other stakeholders, the Corporate Debtor is revived and is made an on-going concern. After CoC approves the plan, the NCLT is required to arrive at a subjective satisfaction, that the plan conforms to the requirements as are provided in sub-section (2) of Section 30 of the l&B Code. Only thereafter, the NCLT can grant its approval to the plan. It is at this stag....
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....itted by him has been accepted as this would amount to a hydra head popping up which would throw into uncertainty amounts payable by a prospective resolution applicant who successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate, as has been pointed out by us hereinabove. For these reasons, the NCLAT judgment must also be set aside on this count." [Emphasis supplied) 16. Ld. AR has drawn our attention to the decision of Hon'ble Delhi High Court in the case of TUF Metallurgical Pvt. Ltd. vs. UOI (W.P.(C) 10528/2022) & connected matter where Hon'ble High Court has also applied the principles laid down by the Hon'ble Supreme Court in the case of Ghanashyam Mishra (supra) and held as follows: "8. In the present cases, as described above, the admitted factual matrix is that the notices and orders impugned in these writ petitions pertain to the income tax clai....